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Tehri Hydro Development Corpn. Ltd. & Anr. Versus Jai Prakash Asson. Ltd.

2012 (9) TMI 1111 - SUPREME COURT OF INDIA

C.A. 3682 Of 2007 - Dated:- 25-9-2012 - Lodha Rajendra Mal, Dave Anil R.And Gogoi Ranjan, JJ. JUDGMENT Ranjan Gogoi, This appeal is directed against the judgment and order dated 20th July, 2006 passed by the High Court of Uttaranchal at Nainital whereby the decree passed by the learned trial court under the Arbitration Act, 1940 (hereinafter referred to as the Act ) has been modified. The terms of award as passed by the learned Arbitrator and the decree passed by the learned trial court as well .....

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espondent-contractor had not been prepared and security money, furnished by way of bank guarantee was not released, the parties went to arbitration in accordance with the Arbitration clause under the contract/agreement. In the course of the aforesaid Arbitration proceeding the appellant-Corporation submitted a final bill which according to the respondent-Contractor entitled it to receive a sum of ₹ 10,17,461.09 on account of work done besides a sum of ₹ 12.50 lakhs that was lying in .....

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of invocation of the claim till the date of the award and at the rate of 12% per annum from the date of the award till payment or till the award is made Rule of court, whichever is earlier. Insofar as the claim of the respondent - contractor to the sum of ₹ 12.50 lakhs lying in deposit with the Corporation, the Arbitrators held the said amount to be beyond the scope of the dispute raised in the arbitration proceeding. Accordingly, the respondent - contractor was left with the option of se .....

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d trial court, notwithstanding the fact that the arbitrator did not decide the said claim, went into the issue and held the respondent - contractor to be entitled to the said amount also. Thereafter, a decree was passed in respect of the two amounts along with interest thereon at the rate of 12% pendente lite and 6% for the post award period. Aggrieved by the aforesaid order passed by the learned District Judge, Tehri Garhwal, the appellant moved the High Court of Uttaranchal by filing an appeal .....

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aid claim to be settled by an Arbitrator appointed by it. Insofar as the question of interest is concerned, the High Court did not deal with the said aspect of the matter at all. Aggrieved, the Corporation is before this court challenging the judgment and order dated 20th July, 2006 passed by the High Court of Uttaranchal. 5. We have heard Mr. Puneet Taneja, learned counsel for the appellants and Mr. S.B. Upadhyay, learned senior counsel for the respondent. 6. Learned counsel for the appellants .....

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resorted to another process of arbitration without seeking leave in the first arbitration proceeding to have recourse to a second round of arbitration. The arbitration proceeding leading to the award is, therefore, without any authority of law. Specifically, insofar as the amount of ₹ 12.50 lakhs is concerned, according to the learned counsel for the appellants, the said amount was not adjudicated upon by the Arbitrators and the same was to be recovered by an amicable process or by resort .....

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the respondent - contractor, if at all, should have been directed by a process contemplated by the specific provisions of the Arbitration agreement between the parties. Insofar as the grant of interest is concerned, learned counsel for the appellants has relied on Clauses 1.2.14 and 1.2.15 of Part II of the contract agreement between the parties to contend that under the aforesaid clauses of the agreement governing the parties there was a specific bar to grant of interest. Relying on several ju .....

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vely participated in the proceeding before the Arbitrators and therefore, cannot, at this stage, question the jurisdiction of the Arbitrators to make the award in question. It is contended that the claim of the respondent to the amount of ₹ 10,17,461/- having been held in its favour all along, the same does not disclose any basis for interference. In so far as the amount of ₹ 12.50 lakhs is concerned the only issue that will require deterimination is the manner in which the de novo a .....

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d the arbitrator as well as the courts below to grant interest. Learned counsel has also relied on the decisions of this court in Indian oi l Corporation Ltd. vs. Amritsar Gas service and others [(1991) 1 SCC 533) , State of Orissa vs. B.N. Agarwalla [(1997) 2 SCC 469] and Asian Techs Limited vs . Union of India and others (2009 10 SCC 354) (para 21) in support of the contentions advanced. 8. Para 7A of the U.P. Civil Laws (Reforms and Amendment) Act, 1976 referred to above may now be reproduced .....

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ing six per cent per annum as the arbitrators or umpire may deem reasonable on such principal sum from the date of the award to the date of payment or to such earlier date as the arbitrators or umpire may think fit, but in no case beyond the date of the decree to be passed on the award. 9. Insofar as the jurisdiction of the Arbitrator to adjudicate on the two claims of ₹ 10,17,461/- and ₹ 12.50 lakhs are concerned, the dispute is capable of resolution within a short compass. The enti .....

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ystallized. It is these specific claims, after quantification, that had been referred to the Arbitrators in the proceeding in which the award has been passed. It will, therefore, not be correct to say that the arbitration proceeding in respect of the specific claims of the contractor stood barred in view of the earlier arbitration proceeding between the parties. That apart, from an order passed by the Arbitrators on 15th January, 1994, which is available on record as an enclosure to the counter .....

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require any further scrutiny by us. 10. In so far as the claim in respect of the sum of ₹ 12.50 lakhs is concerned, it has already been noticed that the entitlement of the respondent - contractor to the said amount had not been adjudicated upon by the Arbitrators on the ground that the said issue was not an arbitrable issue and the same ought be resolved either by an amicable process or by way of a suit for recovery. If the aforesaid claim was not adjudicated upon by the Arbitrators the l .....

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by the parties, if the parties are, at all, inclined to go into a further round of adjudication at this stage. We, therefore, interfere with the aforesaid part of the order of the High Court and, subject to our observations above, we leave the parties to work out their remedies as may be considered best and most appropriate in the facts and circumstances of the case. 11. This will lead the court to a consideration of what is the principal bone of contention between the parties in the present cas .....

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ndings between the parties or in respect of any delay or omission on the part of the Engineer-in charge in making immediate or final payments or in any other respect whatsoever. INTEREST ON MONEY DUE TO THE CONTRACTOR : No omission on the part of the Engineer-in charge to pay the amount due upon measurement or otherwise shall vitiate or make void the contract, nor shall the contractor be entitled to interest upon any guarantee or payments in arrears nor upon any balance which may on the final se .....

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s on account of some dispute or difference between the parties or even otherwise. 13. Of the several decisions of this Court referred to by the learned counsel for the appellant the judgments of the Constitution Bench of this Court in Secretary, Irrigation Department, Government of Orissa and others vs . G.C. Roy and anr. (1992) 1 SCC 508) and Executive Engineer, Dhenkala l Minor Irrigation Division, Orissa and others vs . N.C. Budhra j (deceased) By lrs. And others (2001) 2 SCC 721) will requir .....

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arbitrator, the arbitrator would have the power to award the interest. This is on the basis that in such a case of silence (where the agreement is silent) it must be presumed that interest was an implied term of the agreement and, therefore, whether such a claim is tenable can be examined by the arbitrator in the reference made to him. The aforesaid view, specifically, is with regard to pendente lite interest. In the subsequent decision of the Constitution Bench in N.C. Budhraj s case (supra) a .....

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considered in Sayeed Ahmed & Co. vs. State of Uttar Pradesh & Ors. (2009) 12 SCC 26) and the decision in Madnani Construction case (supra) was considered in Sree Kamatch i Amman Constructions vs. Divisional, Railway manager (Works), Palghat and others (2010) 8 SCC 767). In Sayeed Ahmed s case (supra) (para 24) it was held that in the light of the decision of the Constitution bench in GC Roy s case and NC Budhraj s case it is doubtful whether the observations in Engineers-de-Space-Age s .....

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the judgment in GC Roy s case (supra) will hold the field. Though the gist of the said principle has been noticed earlier it would still be appropriate to set out para 44 of the judgment in G.C. Roy s case (supra) which is in the following terms : 44. Having regard to the above consideration, we think that the following is the correct principle which should be followed in this behalf. Where the agreement between the parties does not prohibit grant of interest and where a party claims interest an .....

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e the arbitrator should necessarily award interest pendent elite. It is a matter within his discretion to be exercised in the light of all the facts and circumstances of the case, keeping the ends of justice in view. 16. The provisions of the UP Civil (Reforms and Amendment) Act amending the First Schedule to the Arbitration Act, 1940 does not assist the respondent - contractor in any manner to sustain the claim of award of interest pendente lite, inasmuch, as paragraph 7A to the First Schedule, .....

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alla s case (supra) the views of the Constitution Bench in GC Roy s case (supra) with regard to interest pendente lite could not have been and, infact, were not even remotely doubted. The observation of the bench in B.N. Agarwalla s case that in G.C.Roy s case (supra) the decision in Executive Eningeer (Irrigation), Balimela and others vs . Abhaduta Jena and others (1988) 1 SCC 418) was not overruled was only in the context of the issue of award of interest for the pre reference period. The deci .....

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